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Thursday, October 27, 2016

Privatization of ALROSA will replenish the budget of 52.2 billion rubles

Prime Minister Dmitry Medvedev signed a decree on the sale of 10,9% of the shares in the Russian group of diamond mining companies, ALROSA. As stated by the head of Rosimushestvo Dmitry Pristanskov, following the transaction, the budget will be increased by 52.2 billion rubles. According to him, about 20% of the demand fell on the Russian non-state pension funds. To evaluate the privatization of ALROSA, “MK” asked the expert.

photo: morguefile.com


GRICHENKOV Alexander, expert-analyst of MFX Broker:

“The purpose of this placement is to attract more than 50 billion rubles are being implemented. This is definitely the event with the plus sign. As you know, in 2016 the Federal budget deficit. Therefore, budget revenues are not enough to Finance all the planned expenditure. One of the ways to compensate for the existing lack of funds is the privatization of some state assets – stakes in ALROSA, Rosneft, Bashneft, etc. Placement of ALROSA was successful with strong demand from foreign investors. The purchase took place at a good price, with a minimum discount and it is the hope that other privatized assets, the market will meet an equally or even more favorably”.

Mark GOYKHMAN, analyst GK TeleTrade:

“Privatization of ALROSA shares – first major deal with assets after a long break challenging market conditions, and even under sanctions. Therefore, the mere sale of stock is also remarkable from the point of view of replenishment of the budget, and as a reference for further privatization. It can generally be considered successful because the offering price of the shares was close to the market, the exchange for small packages. This suggests that large state assets there is an adequate demand from investors. And the following scheduled transactions with securities Sovcomflot, Bashneft, Rosneft, VTB can bring enough high income (up to RUB 1 billion, according to the plans of Ministry of economic development). It will reduce by half the need for spending from the Reserve Fund in 2016”.

Roman KUZNETSOV, an analyst at QBF:

“Lower government stake in ALROSA will have a positive impact on the dynamics of the value of the shares, but does not affect financial performance. The situation only darkens the sale price of the securities purchased in the package, which was offered for 65 rubles, i.e. with a slight discount of 3% to the closing price of 07.07.16. This suggests that investors do not overpay for Russian assets in terms of GDP decline and the preservation of high geopolitical tensions. This may result in a loss of profit from the sale of stakes in other state companies, however it is worth noting that for investors ALROSA is not the most attractive assets on offer”.

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